O.C. mortgage companies shed staff with changing market

CashCall Inc. said it may lay off as many as 769 employees. The company, which has offices in Orange and Anaheim, is looking to sublet a portion of its office space. COSTAR GROUP INC.

Leaner lenders

Many mortgage companies have announced possible layoffs in Orange County over the past three months.

JPMorgan Chase: 242

Wells Fargo: 330

CashCall: 769

Discover Financial Services: 74

Rushmore Loan Management Services: 101

SunTrust Mortgage: 89

Bank of America: Undisclosed

Source: Employment Development Department

The improving housing market has spurred a modest recovery in the economy, but not everybody in the real estate industry is benefiting from the turnaround.

Local mortgage companies have laid off hundreds of workers in recent months as rising interest rates tamped down refinancing activity and declining delinquencies reduced the need for specialized servicing.

Rushmore Loan Management Services, a loan servicer based in Irvine, filed a notice last week with the state Employment Development Department revealing plans to cut 101 positions by the end of the year. The filing came shortly after SunTrust Mortgage dismissed 89 employees in Irvine and Discover Financial Services eliminated 74 mortgage jobs in its Irvine office.

Since the summer, large mortgage companies have announced more than 1,600 layoffs in Orange County, according to state filings.

“The industry is reactive,” said Odell Murry, president of the California Mortgage Association. “As mortgage interest rates go up, foreclosures and delinquencies go down and refinancing demand drops accordingly. When demand falls, the industry has no choice but to lay off people if it is to survive.”

Persistently low interest rates since the market bottomed out have led to a surge in refinancing activity over the past three years.

With mortgage companies staffing up to handle the demand, real estate-related jobs have helped lead a tentative recovery in Orange County’s employment market. Between mid-2012 and mid-2013, those occupations – including lending, home-selling, construction and more – grew by 6.2 percent in the county, nearly three times the increase for all types of jobs, according to state employment data. Real estate accounted for nearly 40 percent of the 32,500 new local jobs over the past year.

Orange County’s unemployment rate fell to 6.2 percent in August, well below the state level of 8.9 percent.

State and local employment data for September and October have not yet been released, but there are signs that the mortgage lending sector is pulling back.

Wallace Walrod, chief economic advisor to the Orange County Business Council, said that while employment has been moving in a positive direction, hiring trends in real estate can shift rapidly.

“That’s an industry that scales up and scales down,” he said.

Indeed, Rushmore pointed to recent mortgage origination declines when trimming 20 percent of its Orange County workforce. Discover Financial Services decided to cut 25 percent of its mortgage origination team, a move Discover Home Loans President Robert Smith called a “difficult but necessary business decision” given the recent housing market trends.

Michael McCoy, a spokesman for SunTrust, said the regional bank is getting out of the broker mortgage lending business entirely. SunTrust will continue to lend through retail, correspondent and other channels.

“We’re adjusting our staffing in the mortgage business to reflect the current market conditions,” he said.

The decisions mirror recent moves by a number of local lenders, including Anaheim-based CashCall Inc., which said it may lay off as many as 769 employees across its Anaheim and Orange offices in the next few weeks.

The Internet lender, founded by horseracing enthusiast J. Paul Reddam, is now looking to sublet as much as 40 percent of its office space as its business shrinks. CashCall has expanded in recent years to almost 440,000 square feet of office space in the county, according to records with data provider CoStar Group Inc.

In many cases, the jobs being cut are positions that were intended to be temporary.

Jeffrey Ingham, a senior managing director with brokerage Jones Lang LaSalle, said his mortgage industry clients acknowledge the fickleness of the market. Recently, many of the companies have been looking for short leases with terms that would allow them to staff up or down.

“They’ve had to become more flexible with their business,” said Ingham, who noted that he has seen many mortgage companies downsizing lately. “A lot of these companies, the smarter companies, developed flexibility within their leases.”

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